Long or Short Vega ?

S

SmithTheTrader

This is the first time I am shy to pull the trigger..

Looking at the VIX now, it is neither too high nor too low when compare to historical data (compare to the last 6 months)- A good question to all the elite traders here - should we long or short vega in this moment ?? :confused: :D :cool: :confused:

I believe a lot of people are side line now...:p

Anyone using vega neutral strategy here ?? :confused:
 
Quote from dagnyt:

I'm staying with my negative vega strategies - iron condors.

Mark
More...

Mark,
Thanks for the input and response.

Volatility is moving down when compared to a few months ago, and you are virtually collecting less premium now from your IC. Also, the market is in the phase of consolidation, and it has a chance to break out if you think contradian, this may kill your IC (it hurts more if you open it with low premium). Another bad news is although IV is decreasing, the explosive position (aka your "insurance") still not that cheap to buy, ...dilemma

:mad:
 
Quote from SmithTheTrader:

Mark,
Thanks for the input and response.

Volatility is moving down when compared to a few months ago, and you are virtually collecting less premium now from your IC. Also, the market is in the phase of consolidation, and it has a chance to break out if you think contradian, this may kill your IC (it hurts more if you open it with low premium). Another bad news is although IV is decreasing, the explosive position (aka your "insurance") still not that cheap to buy, ...dilemma

:mad:
More...

Yes, insurance is costly.

I've decided, for now, that I am willing to accept smaller premium for my iron condors precisely because the strategy has been working so well.

If we do get the breakout - a very real possibility - I hope my short options are far enough OTM that I will not need to make any quick adjustments.

These very profitable times for IC traders will end. It always does. But, I cannot affort to sit on the sidelines because I have no ida how long this will last. My compromise is to buy fewer iron condors than I used to buy - plus IV is so high (historical basis) that I can afford to go a bit further OTM. If I collect $280 for a three month iron condor, instead of my preferred level near $325, so be it. That's still plenty good enough.

I blogged on this topic this morning.
http://blog.mdwoptions.com/options_...time-its-always-volatility-decision-time.html


Mark
 
Mark,
Seemed like today is another good day for your RUT IC , congratulation !! ..:)

I just feel gun shy to pull my trigger to get into the position now as it may be a bit late,.. ..:cool:
 
An interesting observation: The VIX at 820 (the ES close on 2-13) is lower than when the ES closed at 863.25 on 1-12. Looks to me that traders are getting used to being kicked in the nuts. So, an iron condor approach or even a bull put spread (DOTM) looks good here. As long as the ES stays rangebound--these strategies or similiar ones look good.
 
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